Which of the following is true of credit cards?

Credit cards are powerful financial tools, but their effectiveness depends on how they are used. Here’s what’s true about credit cards:

1. Convenient Payment Method: Credit cards allow for quick, cashless transactions, making them a preferred payment option for both online and in-store purchases.
2. Potential for Debt: Misusing credit cards, such as overspending or failing to pay off balances, can lead to significant debt due to high-interest rates.
3. Credit Building: When used responsibly, credit cards can help build a strong credit history, which is essential for securing loans or favorable interest rates.
4. Rewards and Benefits: Many credit cards offer perks like cashback, travel rewards, and purchase protection, adding value to everyday spending.

However, cardholders must use them wisely—pay off balances monthly, stay within credit limits, and avoid late fees. Understanding these truths can help you maximize the benefits of credit cards while minimizing risks.